A gauge of future economic activity rose in January for the fourth straight month, adding to evidence that the economy has strengthened in the new year reports USA Today. The Conference Board said that its index of leading economic indicators rose 0.4% in January. The increase pushed the index to its highest point since July 2008.
The measure of leading indicators is designed to anticipate economic conditions three to six months out. Its steady rise has coincided with other positive data that suggest the recovery is picking up. The unemployment rate fell in January to 8.3%, the lowest in nearly three years, after employers added 243,000 net jobs — the most in nine months. Auto sales are up, unemployment aid applications are down, and factories are cranking out goods at a healthy pace.
“Recent data reflect an economy that started the year on a positive note,” said Ken Goldstein, an economist at the Conference Board.
Seven of the 10 indicators measure by the Conference Board increased in January, led by a widening in the spread between short-term and long-term interest rates. That indicates that investors buying long-term bonds want to be compensated for taking on the risk that inflation is going to pick up over the longer term because the consensus view is that rising inflation will accompany a strengthening economy.
Three indicators held the index back. The largest negative was a drop in consumer expectations. Goldstein said a separate index that tracks indicators tied to the current health of the economy had shown some strengthening in the October-December period and in January.
The seven indicators strengthened in January: the spread in interest rates, average factory hours worked per week, stock prices, a credit index, building permits, and two measures for manufactured goods. Read More.